I discovered the solution to weird behavior in the Microsoft XP Scanner and camera wizard. I found a handful of references to it on the Web and Usenet. But no solutions. After some trial and error, I figured out how to restore useful functionality to the wizard.
The weird behavior
Text entered in the Type a name for this group of pictures text box does not automatically change or create the a folder of the same name in the Choose a place to save this group of pictures text box.
For instance, in the dialog box below, notice how entering Birthday Party in the first text box doesn't automatically create a folder path in the second box. This is the weird behavior. (Although for many, this might be the only behavior they have ever witnessed.)
The missing functionality can be restored in two easy steps.
Step 1: Enter the name of the group of pictures in the first text box.
Step 2: Select the drop-down menu in the second text box and locate the path to the new folder. It will be there. You may have to scroll up. In the example below, notice how the path My Pictures\Birthday Party is in the list.
That's it. Once you select the item, you can change the text in the first box and it will change the text in the second box automatically. Problem solved.
And the best news is that the weird behavior will not appear the next time you use the Scanner and camera wizard. See example below.